To be a long term successful chief investment officer in a major super fund you need to excel in at least three major skill areas: investment management, people leadership not just management, and excellent stakeholder and communications skills.
A fourth skill could be managing increasing complexity. Expectations for all these areas have grown as AUM has doubled in the last five years with the entire community now paying far greater attention to the sector.
In the area of investment management CIOs need to have both a short term and long term view of their portfolio’s goals, be nimble enough to execute on opportunities as they present themselves and hold their course/nerve during turbulent periods e.g. recent global market volatility.
Many funds are adopting more active approaches with dynamic and tactical asset allocation being favoured over the old model of a strategic asset allocation and the opportunity to blame the asset consultant if it did not deliver results.
Top this off with the need to balance peer fund relative performance versus a fund’s stated targets to achieve member retirement outcomes and the complexity goes up a notch or two.
Furthermore, the days of a pure investor and poor people leader won’t cut it any longer with investment teams increasing in size and complexity as larger funds insource investment capabilities. Even mid-size funds are looking to be more innovative with their investment processes requiring larger more sophisticated teams. With the pressure on funds to reduce costs and essentially do more with less means the CIO needs to be an excellent talent coach.
Last, but not least a CIO needs to be a stakeholder manager and communicator. This has probably been the steepest learning curve in recent years due to the increased scrutiny on performance and risk post the GFC. Members are more engaged, the media is more interested, and governments and regulators want a safer and better value system. All this means we see and hear from CIOs more often. They are expected to do roadshows presenting to members, train their fund’s financial planners and services teams, undergo increased scrutiny from boards and investment committees not to mention more regular media appearances. This is all on top of their core role of investing.
The role of the CIO reminds me of the international rugby coach who once said that you are only as good as the current season’s results and from the day a coach is hired they are only a few poor results away from being sacked. Just like the modern sports coach the CIO role has become much more complex.
Michael Swinsburg, is managing partner of Alexander Hughes in Australia, an executive search consultant